SME Policy Index for Western Balkans and Türkiye 2026

Annex B. The SME Policy Index 2026 scoring model for Bosnia and Herzegovina

Constitutional set-up of Bosnia and Herzegovina

Bosnia and Herzegovina (BiH) is governed at the state level by its central institutions, whose competences are prescribed by Article III of the Constitution of Bosnia and Herzegovina. The governance structure further comprises two territorial and administrative entities – the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS) – as well as Brcko District (BD)1. At entity level, both the Federation of Bosnia and Herzegovina and Republika Srpska have significant constitutional autonomy, independently regulating matters which are not explicitly assigned in the Constitution to the state-level.2 The entities’ parliaments have jurisdiction over a range of policy areas, including healthcare, education, agriculture, culture, labour, police and internal affairs. Both entities have a president, prime minister and 16 ministries. The Federation of Bosnia and Herzegovina is furthermore divided into ten cantons, each with its own constitutions that prescribe their legislative, executive and judicial authority, and the functioning of their government institutions.

The SME Policy Index 2026 Assessment of Bosnia and Herzegovina

Bosnia and Herzegovina submitted three assessment questionnaires for the SME Policy Index 2026 assessment, one for the state and one for each entity. Information from all three questionnaires has been taken into account in the analysis. Given that Brcko District represents approximately 1% of the total population of Bosnia and Herzegovina, it has not been included in the scoring; however, information on policy developments in the Brcko District has been included in the narrative where relevant.

SME policy making in Bosnia Herzegovina is more decentralised than in the other economies covered by the assessment. Accordingly, information from the two entities has been taken into account in the calculation of the total scores. Policy recommendations have been formulated to emphasise the importance of policy co-ordination in Bosnia and Herzegovina, particularly to prevent local policy measures from infringing on the principle of a single domestic market and distorting competition among enterprises based in different entities.

Based on these considerations and the availability of data, a scoring system involving four models has been developed (Table A B.1).

Table A B.1. Overview of the four scoring models for SME Policy Index 2026

Model 1	Model 2	Model 3	Model 4
1/2 (FBiH) 1/2 (RS)	2/3 (state) 1/6 (FBiH) 1/6 (RS)	1/3 (state) 1/3 (FBiH) 1/3 (RS)	State level only

For most dimensions (Entrepreneurial learning and women’s entrepreneurship, Bankruptcy and second chance, Operational environment for SMEs, Support services for SMEs, Enterprise skills, Innovation policy for SMEs, and SMEs in a green economy), scores were derived by calculating a simple average of the two entities’ scores. This approach (Model 1) has been adopted principally because major policies, mechanisms and institutions under these areas exist mainly at the entity level and therefore needed to be reflected in the scoring.

For two dimensions (Access to finance, and Standards and technical regulations), the second model was selected, giving two-thirds of the weight to the state and one-sixth to each entity, reflecting that responsibilities under these dimensions lie primarily at the state level. Entity-level inputs were nonetheless recognised and incorporated into the scoring.

For two other dimensions (Institutional and regulatory framework for SME policy making and Internationalisation of SMEs), Model 3 was applied, allocating one-third of the weight equally across the two entities and the state.

The new Digital transformation of SMEs dimension applies a combination of Models 1 and 3. Model 1 is used for two of its sub-dimensions, where responsibilities rest primarily at the entity level. However, for the Digital safety sub-dimension, Model 3 is applied, as jurisdiction over this area is shared across all three levels of government.

Finally, the Public procurement dimension applies Model 4, only taking state-level information into consideration.

Table A B.2 gives a more detailed overview of all the SMEPI 2026 dimensions, providing the rationale for the selection of the scoring models.

Table A B.2. Application of the scoring models to SME Policy Index 2026

SMEPI dimension	SMEPI 2026 assessment models	Rationale
1. Entrepreneurial learning and women’s entrepreneurship	Model 1	Competencies for this dimension are mainly held at the entity-level. However, inputs from the state level are also recognized and included in the scoring.
2. Bankruptcy and second chance	Model 1	In Bosnia and Herzegovina there are no state-level responsibilities or programmes for this dimension.
3. Institutional and regulatory framework for SME policy making	Model 3	Legislative simplification efforts are being undertaken at the entity level. However, all three levels of government in Bosnia and Herzegovina have legal frameworks in place that define the general principles and procedures on conducting regulatory impact assessment (RIA) and public-private consultations (PPCs).
4. Operational environment for SMEs	Model 1	In Bosnia and Herzegovina, entities are responsible for their own company registration process. Moreover, there are no services available for obtaining licenses for SMEs at the state level. Although the state level has competences for tax compliance procedures, this policy area was not scored in this assessment cycle. State-level inputs were taken into account for sub-dimension 4.1 on digital government services as there has been some progress in co-ordinating public administration reform, and were factored into the score for this sub-dimension.
5a. Support services for SMEs	Model 1	Support services for SMEs are designed and implemented at the entity level. Moreover, a dedicated agency for provision of support services exists in each of the entities.
5b. Public procurement	Model 4	Public procurement is regulated by the state Law on Public Procurement.
6. Access to finance for SMEs	Model 2	Responsibilities under this dimension are dominantly at the state level. However, inputs from the entities are also recognised and included in the scoring.
7. Standards and technical regulations	Model 2	The greater weight (2/3) is given to the state to recognise its competences in overall policy co-ordination and transposition of standards and technical regulations. However, entity performance was also scored, as the initiatives and programmes to facilitate SMEs access to standardisation are dominantly at the entity level.
8a. Enterprise skills	Model 1	Competencies for this dimension are mainly at the entity level.
8b. Innovation policy for SMEs	Model 11	Since the mechanisms and institutions to support SMEs in innovative activities are generally at the entity level, the scoring model accounts for their performance. Collaboration between SMEs and research institutions is also established and supported at the entity level. However, the scoring model also recognises the importance of the state, particularly for overall policy co-ordination and intellectual property rights.
9. SMEs in a green economy	Model 1	SME greening policies are devised and implemented at the entity level and there are no institutions at the state level that are in charge of promoting a green economy. Moreover, strategies and action plans that include goals for the green economy are adopted at the entity level.
10. Internationalisation of SMEs	Model 3	This dimension covers policies which can be introduced at both the state and the local level. In Bosnia and Herzegovina, institutions that play a role in export promotion exist at both levels, however, programmes to support SME integration into global value chains and programmes to promote e-commerce, are implemented at the entity level.
11. Digital Transformation of SMEs	Model 1 & Model 3	As policies and programmes supporting the digital transformation of SMEs fall primarily within the competence of the entities, Model 1 is applied for the majority of sub-dimensions, reflecting the role of the Federation of Bosnia and Herzegovina and Republika Srpska as the main drivers of SME digitalisation. However, for the Digital safety sub-dimension, Model 3 is applied, recognising that jurisdiction over digital safety frameworks is shared across all three levels of government. The economy profile narrative takes into account relevant policy developments and initiatives across all levels of government.s

Note: 1. For Dimension 8b, model 1 is applied, with the sole exception of the thematic block on intellectual property rights which took into consideration state-level-inputs as well.

Notes

← 1.  Brčko District is a self-governing administrative unit under the sovereignty of Bosnia and Herzegovina, formally shared by both entities but operating independently of their jurisdiction, with its own institutions and broad administrative competences.

← 2.  The competences of the institutions of Bosnia and Herzegovina are prescribed by Article III(1) of the Constitution of Bosnia and Herzegovina. Entity competences are prescribed by Article III(2), while Article III(3) stipulates that all competences not expressly assigned to the state-level government belong to the entities.